A months-long wait, now rewarded.
From the ashes of KOI emerges OverActive Media's latest venture: A rising phoenix. On January 4th, the company announced its ongoing absorption of KOI and Movistar Riders' brands after months of negotiations. While fans in the Iberian peninsula celebrate, significant uncertainties linger around this move. After a challenging off-season for all parties involved, it is time to delve into the details of this transition.
What does this deal entail?
The acquisition of KOI and Movistar Riders, though sensible to the public, comes with its share of caveats. Despite seeming finalized, the deal has not been officially concluded. Coming under the form of a non-binding letter of intent signed by OverActive Media, sources indicate that nothing has yet been set in stone. While there are no indications of any party considering breaking it at this point, several details remain to be ironed out.
This deal marks a major milestone for OverActive Media, potentially becoming the owners of two additional prominent Spanish brands and hosting one of the largest global content creators. Per sources, the deal is said to be entirely dependent on shares of the entertainment group OAM on the Canadian market. If successful, the group will issue 60 million new shares to be shared with KOI and MRS, raising its market valuation to CA$36,400,000, equivalent to 140 million shares at CA$0.26/share.
Strategically, OverActive Media aims to retain a controlling majority over all brands, including MAD Lions. Initially, KOI and Movistar Riders will receive 22.5 million shares each (valued at CA$5,850,000 each), with a potential bonus of 7.5 million shares each (valued at CA$1,950,000 each) if the partnership boosts the group's activities in the EMEA region.
Note: Share values are based on the stock price at the time of writing and may change over time.
Looking towards a joint future
Due to the last-minute nature of this joint venture, certain details still need refinement. As publicly stated, the operation is yet to be finalized, and requiring more time to settle with its partners, a final name for the merged brand hasn't yet been determined. Sources indicate that OverActive Media and its partners are actively working on a new joint brand, aiming to conclude the rebranding process by the end of 2024. This involves agreements with various organizers and investors and is expected to take several months.
With three merged entities, OverActive Media will possess assets from three distinct brands—MAD Lions contributing their LEC and Game Changers teams, Movistar Riders contributing their LVP SuperLiga spot and newly formed Counter-Strike 2 division, and KOI bringing its branding and VCT EMEA division, an asset which caused major troubles in negotiations notably due to the difficult departure of Ibai Llanos and Gerard Piqué from Infinite Reality.
While Gerard Piqué and Gabriel Saenz de Buruaga (co-founder of Movistar Riders) are expected to join the group's board of directors, it's crucial to note that owners of OverActive Media will maintain majority stake in the company, influencing all major decisions.
In a context of cash scarcity, it would have been difficult to imagine a deal based on a share buyback for OAM. The choice of introducing the Spanish brands to the Canadian group is therefore made through a stock market operation and allows for the conservation of cash for operational activities. The operation enables OverActive Media to justify a capital increase as well as to fix a valuation increase, encouraging revenue forecasts.
The Finer Details
A months-long negotiation, sources indicate that this deal, which first only involved the Movistar Riders and KOI, has been in the work for quite some time. Now under OverActive Media's umbrella, fans can breathe a cautious sigh of relief as the separation of KOI from Infinite Reality is behind them.
Without roadblocks in sight, it is expected for this deal to sail onward smoothly. Despite this, OverActive Media has taken a few liberties when signing with KOI. Per documents made available to Sheep Esports, the deal includes a lock-up period of up to 5 years for KOI's assets. To avoid potential issues, Ibai Llanos and Gerard Piqué will only be allowed to sell up to 20% of their shares annually, with OAM also reserving the right to cancel shares in case of a contract breach. Despite these restrictions, sources have also indicated that Ibai and Gerard will be receiving salaries for their continuous services to the organization.
Setting aside financials and contractual clauses, it is interesting to note that the group has had little to no power over their new VCT EMEA division during this off-season. Being one of the assets which remained in negotiation until late November, the roster is said to have been almost entirely assembled while under the wings of Infinite Reality, KOI's prior ownership group.
